Cut a 4" strip from the short end (the 36" end) of your fabric. You will use this strip to make your handles.
Press the strip in half length-wise, wrong sides together.
Fold each edge in toward the crease (shown in photo), fold in half along the crease, and press.
Sew about 1/8" from each edge. Cut your strip in half and you've got 2 handles.
Fold your fabric in half along the 36" side, right sides together. (Your resulting rectangle will be about 36" by 20". Sew the 3 open edges, leaving enough space for turning your bag right side out, about 4-5". Turn your bag right side out. Stitch the opening closed. This will be the inside of your bag. Fold the "inside" down into the "outside."
Turn the top edge down 1" and press. (I turned my bag so the top edge was toward me, so I was turning it up. That's why my photo looks upside down.)
Stitch about 1/8" from the top edge to hold them in place.
Fold them up and pin. Stitch about 1/8" from the top edge all the way around your bag. Stitch about 3/8" from the top edge also.
This step can be omitted if you wish. Turn your bag wrong side out and stitch across each bottom corner. This will give your bag some width and help hold the lining in place. Turn your bag right side out.
Here's the bottom corner from the outside.
Here's another view of the same corner.
Ta da! You're done! You've got a new bag for yourself, or fill it with goodies for a gift.